Reverse Charge on Services :
Notification 13/2017 Central Tax (Rate) dt. 28.06.2017 has been issued specifying following services which are covered under reverse Charge.
(a) Services by Goods Transport Agency who has not paid tax in respect of transportation of goods to specified persons viz. Factories, Societies, person registered under GST Act, body Corporate, Partnership firm, casual taxable person.
(b) Services by an individual Advocate including senior advocate or form of advocates by way of legal services to any business entity located in the taxable territory.
(c) Legal Service” means any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational Services before any court, tribunal or authority.
(d) Services supplied by an arbitral tribunal to a business entity.
(e) Sponsorship services provided to any-body corporate or partnership firm.
(f) Services supplied by the Central Government, State Government, Union Territory or local authority to business entity (except Postal and courier service, aircraft service, transport of goods or passengers)
(g) Services supplied by the Central Government, State Government, Union Territory or local authority by way of renting of immovable property to a person registered under the CGST Act.
(h) Services supplied by a director of a company or a body corporate to the
company or body corporate.
(i) Services supplied by an insurance agent to any person carrying on insurance business.
(j) Services supplied by a recovery agent to a banking company or a financial institution or a non-banking financial company.
(k) Services supplied by a person located in non-taxable territory by way of transportation of goods by vessel from a place outside India upto the customs station of clearance in India.
(l) Services supplied by an Author, music composer, photographer, artist or the like by way of transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works to a publisher, music company, producer or the like.
(m) Supply of services by the members of Overseeing Committee to Reserve Bank of India.
Checkpoints :
1. Identify which services eligible for payment of tax under RCM are received by the registered person. All such services should be captured for payment. E.g. Proper differentiation should be done in Transport or Freight Charges and Goods Transport Agency Services. Transport / Freight Charges are exempt from tax, but Goods Transport Agency services are taxable.
2. Verify the process / system of determining liability under RCM. Confirm that all vendors supplying these specified services are captured in the working.
3. Check appropriate tax rate has been applied for payment of tax.
4. Check the payment is made by debiting the amount Cash Ledger.
5. Check the tax is paid as per the provisions of Section 13(3) of the CGST act, as earlier of the following dates –
a. Date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his book of account, whichever is earlier, or
b. The date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier.
6. Check in case of supply by associate enterprises, where the supplier of service is located outside India, the payment shall be done immediately after the entry in the books of account of the recipient of supply or the date of payment whichever is earlier.
7. Check invoice is raised by the recipient for payment of tax.
8. Verify that the recipient has availed the Input Tax Credit in all eligible cases, where the tax has been paid under RCM.